Monday, November 12, 2007

"A herd of pigs"

"This is not one pig flying in orbit, this is a herd of pigs with gold trotters, platinum tails and diamond eyes and we ought to be asking ourselves, where is our common sense. Are we really saying that we are so frightened of the Americans that we must fling gold bars at something that we don't even know is going to work?"

That was Gwyneth Dunwoody, chair of the House of Commons Transport Committee, speaking on the Today programme this morning, her comments coinciding with the publication of her the committee report on the EU's Galileo satellite navigation system.

But any attempt to dismiss this as hyperbole can easily be dispelled by reference to the actual report. On the "gold bar" issue, for instance, the report says:

Phase 3 of the project, the deployment phase, has yet to begin. This is by far the most costly pre-operational phase, and yet projected costs have already risen significantly. When we produced our last report on Galileo in 2004, the total cost of Phase 3 was estimated to be €2.1 billion, of which the PPP concessionaire was supposed to pay €1.4 billion and the European Union would have paid €700m. The current cost estimate for phase 3 is €3.4 billion – an increase of some 60 percent in three years.

Apart from the increase in overall costs, the collapse of the PPP means that European tax payers are likely to end up financing the project in its entirety, facing an effective cost increase of 385 percent to the taxpayer. This means an increased commitment from the public purse of at least €2.4 billion from now on, just to get the system into orbit. To this should be added an estimated £5.5 billion over 20 years to operate the Galileo system – an estimated £275 million per year.

As to the utility of the project, we get this:

We have no reason to doubt that the Galileo project, if completed, could produce a wide array of benefits, both direct and indirect. We also acknowledge the difficulty associated with estimating such benefits ten or twenty years into the future. This is all the more reason to exercise caution. In our view, the benefit projections put forward by the European Commission throughout the life-time of the Galileo project appear fanciful. These figures have generally been put forward explicitly to assist decision making in the Council and European Parliament, and yet the supporting evidence has rarely amounted to more than the most basic collation of data.

Then we get a view of the management of the project:

There is an alarming absence of rigorous and unprejudiced appraisal of the costs and benefits of different options for Galileo. Cost-benefit analyses undertaken years ago, based on assumptions which no longer hold true, cannot be relied upon to justify or rule out any particular course of action in 2007 or 2008.

Which brings the committee to the conclusion that:

We fear that Galileo's status as a flagship grand projet is clouding the judgement of some in relation to its true, realistic and proven merits. An atmosphere that does not allow the continued rationale for the full Galileo programme to be questioned appears to have enveloped Brussels. But no amount of perceived prestige and status derived from competing in a civilian space race and no amount of vague but euphoric anticipation of enormous economic and employment benefits can make up for rigorous and balanced analysis of costs and benefit.

None of the three key EU institutions has seen fit to cool the overheated atmosphere by ensuring that proper comprehensive analyses and cost-benefit evaluations are undertaken before any further decisions are made.

…with a coruscating condemnation of the EU commission:

The history of the Galileo programme provides a textbook example of how not to run large-scale infrastructure projects. Many of the problems encountered by the project are not peculiar to the EU and can be observed across a wide range of projects carried out by Member States. However, the processes and institutions of the European Union are in danger of falling into disrepute if Galileo is allowed to continue in its present form.

That brings us to the role of our provincial government:

The Government must work to ensure that common sense and good governance are reinstated. The time has come for the Government to initiate a reappraisal of other large EU projects to ensure that the Galileo fiasco is not repeated elsewhere, outside the limelight.

This reinforces the Committee's view that:

It is entirely conceivable that the best cost-benefit solution at this stage might be to scrap the programme entirely, and the Government should not resile from that conclusion, if it is where the evidence leads.

However - and here is the rub – with the adoption of the Lisbon treaty which brings with it a space policy and an EU competence, the EU commission can go ahead with the project, on the basis of a qualified majority vote. This is on the basis of the British government (i.e., us, the taxpayers) financing 17 percent of the total costs, with two thirds of the voting members making no contribution at all to a project which, over term could cost at least £10 billion.

Thus, while the Committee's report makes highly entertaining reading, and listening to Dunwoody is even more entertaining, what they say or think makes not a blind bit of difference - the grand projet will go ahead anyway. Our role is simply to pay the bills.